Walt Disney Company
Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Fax: (818) 840-1930
A colossal force in the entertainment industry, The Walt Disney Company is best known for bringing decades of fantasy and fun to families through its amusement parks, television series, and many classic live-action and animated motion pictures. Since 1984, a pivotal time in the company’s history, Disney has enjoyed an enormous creative and financial renaissance, due to the leadership of chief executive officer Michael Eisner: the success of such subsidiaries as Touchstone Films, Hollywood Pictures, The Disney Studios, Buena Vista Distribution, The Disney Channel, and Buena Vista Home Video; the sales of Disney consumer products through The Disney Stores and a multitude of licensing arrangements; and a recommitment to excellence in the making of original feature-length animated films. The grand opening of Euro Disney in 1992, despite unpromising initial revenues, is just one example of Disney’s continually aggressive approach to corporate growth.
Walt Disney, the company’s founder, was born in Chicago in 1901. His appeal to greater America is said to have had roots in his humble, middle-class upbringing. Disney’s father, Elias, moved the family throughout the midwestern United States seeking employment. Young Disney grew up in a household where hard work was prized: feeding the family’s five children left little pocket change for amusement. Walt Disney began working at the age of nine as a newspaper delivery boy. His father instructed him and his siblings in the teachings of the Congregational Church and socialism.
Drawing provided an escape for Disney, and at the age of 14 he took his work on the road and enrolled at the Kansas City Art Institute. His art was temporarily put on hold when he joined the Red Cross at age 16 to serve as an ambulance driver at the end of World War I. In 1919 he returned to the United States and found work as a commercial artist. Together with Ub Iwerks, another artist at the studio, Disney soon formed an animated cartoon company in Kansas City.
In 1923, following the bankruptcy of this company, Disney joined his brother Roy in Hollywood. By the time he arrived on the West Coast, word came from New York that a company wanted to purchase the rights to a series of Disney’s live-action cartoon reels—the one that would later be called Alice Comedies. A distributor named M. J. Winkler offered $1,500 per reel, and Disney joined her as a production partner.
A series of animated films followed on Alice ’s heels. In 1927 Disney started a series called Oswald the Lucky Rabbit, which met with public acclaim. The distributor, however, had the character copyrighted in its own name, so Disney earned only a few hundred dollars. It was while pondering the unfairness of this situation on a California-bound train that Disney first thought of creating a mouse character named Mortimer. He changed the name to Mickey Mouse, drew up some simple sketches, and went on to make several Mickey Mouse films with his brother Roy, using their own money.
On the third Mickey Mouse film, Disney decided to take a bold step and add sound to Steamboat Willie. The cartoon was synchronized with a simple musical background. The process provided some of the first technical steps in film continuity: music was played at two beats a second and the film was marked every 12 frames as a guide to the animator, and later an orchestra.
Film distributors laughed at Disney’s idea. Finally one, Pat Powers, released Steamboat Willie in theaters. Audiences loved what they saw and heard, and suddenly Disney was a hit in the animation business. In 1935 the New York Times called Mickey Mouse “the best-known and most popular international figure of his day.” Meanwhile, Disney suffered criticism from observers who judged him to be a cartoonist of only mediocre ability. (Iwerks was responsible for the actual design of Mickey Mouse and the other characters.) Disney was, however, given credit for his ability to conceptualize characters and stories.
The Mickey Mouse projects brought in enough cash to allow Walt Disney to develop other projects, including several full-length motion pictures and advances in Technicolor film. Disney’s first full-length film, Snow White and the Seven Dwarfs, opened in 1937 to impressive crowds and led to a string of Disney hits, including Pinocchio and Fantasia in 1940, Dumbo in 1941, Bambi in 1942, and Saludos Amigos in 1943.
Around 1940 Disney decided to tackle live-action films, first with The Reluctant Dragon and to a greater extent with 1946’s Song of the South. Meanwhile, during World War II, Disney lent his characters to the war effort, making shorts, including one in which Minnie Mouse showed American homemakers the importance of saving fats. After the war, Walt Disney Productions was back in business with live-action features including 20,000 Leagues Under the Sea. The Living Desert was released in the early 1950s by Disney’s new distribution company, Buena Vista, to tremendous box office success.
During the 1950s, as Americans began to spend more time at home watching television for entertainment, Disney’s studio took full advantage of the small screen revolution. In 1954, the Disneyland television series premiered. The show included an introduction by Walt Disney and incorporated film clips from Disney productions with live action and coverage of Disneyland. Some four million people tuned in each week. Disney also made a national folk hero out of Davy Crockett when he devoted a three-part program to coverage of his life. Within a matter of weeks, American boys could not live without coonskin caps and other Crockett merchandise, all of which earned Disney a fortune. Crockett’s popularity led to the era of the Disney live-action adventures that included the 1950s hits The Great Locomotive Chase, Westward Ho, Old Yeller, and The Light in the Forest.
In October 1955 The Mickey Mouse Club debuted on the ABC television network. The hour-long show aired at 5 p.m. weekdays and made television history. Six years later, his groundbreaking Sunday night color TV show Walt Disney’s Wonderful World of Color (later changed to The Wonderful World of Disney ), began its 20-year run on NBC. At the same time, Disney was making stars out of Fred MacMurray, Hayley Mills, and Dean Jones in movies like The Shaggy Dog, The Absent-Minded Professor, Pollyanna, and The Parent Trap. In 1964 Disney’s Mary Poppins became one of the top-grossing films of all time.
Disney required professionalism of his staff and demanded the highest-quality Technicolor available, and as a result his live-action films topped competitors in both creativity and technical standards. He also had his hand in several other projects, including Audio-Animatronics (automatically controlled robots) and a Florida amusement complex that eventually became Walt Disney World, complementing California’s vacation hot spot, Disneyland.
On December 15, 1966, Walt Disney died of lung cancer. Shortly after Disney’s death, his brother Roy issued an optimistic statement pledging that Walt Disney’s philosophy and genius would be carried on by his employees.
But no one could match Walt Disney’s keen story sense or enthusiasm, and the studio foundered through most of the 1970s despite several strong chief executive officers, including E. Cardón “Card” Walker, who had joined the company as a traffic boy in 1938. The studio did manage a few successes during this period, including Blackbeard’s Ghost, with Dean Jones and Suzanne Pleshette, and the 1969 release The Love Bug, which became the year’s biggest box office hit and the second-highest grossing film in Disney history after Mary Poppins. Other popular releases of the late 1960s and early 1970s included The Jungle Book, The Aristocats, Bedknobs and Broomsticks, and several live-action features.
But a run of box office disappointments followed in the mid-1970s before The Rescuers proved successful. Pete’s Dragon, an experimental film combining human and animated characters, followed. Progress was slow but steady for the Disney studio in the late 1970s and early 1980s as well. The studio released three new live-action movies: The World’s Greatest Athlete, Gus, and The Shaggy D.A. Return from Witch Mountain, a sequel to the popular mystery-fantasy Escape to Witch Mountain, premiered in 1978. And a risky science-fiction venture titled The Black Hole cost $20 million to produce but was lost in the amazing success of Star Wars, an all-time science-fiction box office record-breaker that became one of the most popular films ever released in the United States. Chief executive officer Ron Miller brought in new directors and younger writers who produced such films as Watcher in the Woods and the computer-generated Tron, but achieved only mild success in the face of competition from other movie studios.
In 1983, beginning with the release of Mickey’s Christmas Carol, Disney’s fortunes finally began to look up. A string of successful movies followed, including the Arctic adventure Never Cry Wolf and a production of Ray Bradbury’s Something Wicked This Way Comes. That same year the company also began marketing a family-oriented pay-TV channel called the Disney Channel, which quickly became the fastest-growing channel on cable television.
Corporate raider Saul Steinberg attempted a hostile takeover of the company in 1984. Disney ultimately bought Steinberg’s 11.1 percent holding in the company for $325.4 million. A number of lawsuits were filed by shareholders against both Disney and Steinberg’s Reliance Group Holdings, charging that Disney’s managers had attempted to secure their positions and had lowered the value of the stock. The suits were settled in 1989 when the two companies jointly agreed to pay shareholders $45 million.
Shortly after their purchase of 18.7 percent of Disney’s stock, the Bass family of Texas supported the Disney Board’s hiring of Michael Eisner from Paramount Pictures to be Disney’s new chief executive officer and Frank Wells to be president.
Eisner, responsible for such Paramount blockbusters as Raiders of the Lost Ark and Beverly Hills Cop, immediately began to emphasize Touchstone Films, a subsidiary devoted to attracting adult movie audiences. Commentators note that Eisner, like Walt Disney, has had the ability to predict and deliver movies people want to see. The 1985 release of Down and Out in Beverly Hills helped Touchstone build momentum, which it increased with Outrageous Fortune, Tin Men, Ruthless People, and other hits. In Eisner’s first four years as chief executive officer, Disney surged from last place to first in box office receipts among the eight major studios.
Eisner also set out to take full advantage of expanding markets such as cable television and home video. Disney signed a long-term deal with Showtime Networks, Inc., giving the cable service exclusive rights to Touchstone and other Disney releases through 1996. In addition, Eisner bought KHJ, an independent Los Angeles TV station; sought new markets for old Disney productions through television syndication; and began to distribute TV shows like The Golden Girls.
Certain Disney classics, including Lady and the Tramp and Cinderella, were released on video cassette during the late 1980s. Eisner protected the value of the films by limiting the availability of the tapes. He also scheduled the re-release of many other films for the late 1980s and early 1990s, by which time a new generation of children would be ready to see the films in the theater once again. Disney’s revenues soon began to increase, averaging an improvement of approximately 20 percent annually during the second half of the 1980s.
Disney also airs a two-hour show each Saturday on French television. Marketing and promotion of Disney videos and tie-in merchandise in other parts of western Europe are increasing. The theme parks continue to flourish. In 1989 Disney-MGM Studios Theme Park opened near Orlando, Florida, on the grounds of Walt Disney World. Despite its name, the park is not a collaboration between the two studios; Disney purchased the rights to include attractions based on MGM films. Euro Disney, of which Disney owns 49 percent, opened outside of Paris, in Marne-la-Vallee, on April 12, 1992; and Tokyo Disneyland, licensed though not owned by Disney, regularly draws phenomenal crowds in a powerful consumer market. Plans have been made to open a second Disney-MGM Studios park, on a site adjacent to Euro Disney, in the mid-1990s. In the United States, visitors to each of the original theme parks exceed ten million a year and are expected to continue to increase. Both technical and resort-related developments at the parks remain major concerns for the company. In 1991 alone, Disney spent more than $924 million refurbishing existing properties and constructing new park attractions and theme-oriented hotels.
In the early 1980s the parks were responsible for about 70 percent of the company’s revenue. Although they continue to be a crucial part of the company, the theme parks have found competition with Disney’s newer projects, including hotel expansions, home video distribution, and Disney merchandising, which together in 1991 garnered an impressive 28 percent of fiscal revenues. Virtually as important, perhaps more so given their unrealized potential, are Disney’s international operations—evident not only in Japan and France, but throughout much of Europe, the former Soviet Union, South America, and China—which contributed 22 percent of total revenues in 1991. Future global-oriented plans involve introducing more Disney books, videos, and related merchandise to increase sales in both domestic and foreign markets. In addition, Disney plans to terminate a film distribution relationship with Warner Brothers International in 1993 and begin marketing Disney and non-Disney pictures through its own international division.
Meanwhile, Touchstone remains healthy. Hollywood Pictures, Disney’s newest film-producing arm, began making more films in the late 1980s. Disney continued to score hits with Three Men and a Baby, Good Morning Vietnam, Who Framed Roger Rabbit, and others. Most importantly, production costs, though constantly rising, were held by Disney in 1989 to an average of $15 million per movie, compared to an industry average of more than $23 million.
The 1990s, termed the “Disney Decade” by the company, should be witness to perhaps the most dramatic changes and accomplishments of Disney’s more than half-century history. If 1990 and 1991 are any indication, the remainder of the decade will be highlighted by continued tough Hollywood negotiations, box office wars, large overseas financing and expansion, omnipresent marketing campaigns, unique entertainment ventures, media event films, and the special imprint of not only Eisner but president Frank Wells and studio chairman Jeffrey Katzenberg.
By the second quarter of 1991, the studio, under Katzenberg’s strong leadership, had surpassed the theme parks in profitability, leading the company to commit to a record-high 25 new films in 1992. By far the greatest highlight of 1991 was Disney’s 30th feature-length animated film, Beauty and the Beast. Amid a troubled year and a depressed economy, during which corporate net income plummeted by 23 percent and Disney, despite the success of its studio, experienced its first year with no growth since 1984, this film— nominated for best picture and winner of Academy Awards for best original score and best original song—provided much-welcomed relief. Beauty, like its 1989 Oscar-winning predecessor The Little Mermaid, shattered previous records for the most successful opening of an animated film. It quickly became the highest-grossing picture of its genre. Such a warm public reception and the accompanying accolades of critics virtually insure that the fall 1992 video release of the movie will be an enormous financial coup. Not surprisingly, animation will continue to play a major role in Disney Studio operations; Aladdin, with Robin Williams as the genie’s voice, is scheduled for an opening in late 1992.
Although Disney is notorious for undercutting its Hollywood competitors, it, too, has been forced to pay exorbitant amounts for top creative talent. Both Bernard Weinraub, in a New York Times article, and Eisner, in the company’s 1991 annual report, reported that Disney will attempt to stem the flow of high production costs for big-budget films and instead offer films with appealing storylines and engaging characters. According to Ron Grover, Katzenberg himself began pushing for such a redirection in early 1991. Presumably, films like the modestly budgeted 1990 sleeper Pretty Woman may be expected in the future.
Disney’s newest forays—its creation, for example, of Hyperion Press and Hollywood Records for stakes in the publishing and adult music industries—are expected to further strengthen its reputation as an entertainment giant. Yet, here too, it has become increasingly cautious. In August it revealed that its Imagineering division, responsible for theme park design, was laying off up to 400 of its employees. Further news that Euro Disney’s profitability for its first year was in serious doubt indicated to some that Disney might be struggling. However, Disney’s overseas investment is less than $200 million, “a fraction of the total,” according to Stewart Toy. “And whether or not there’s a profit, Walt Disney gets 10 percent of ticket sales and 5 percent of merchandise sales.”
As the Disney Decade continues to unfold, and speculations of mergers and other high-level behind-the-scenes negotiations repeatedly surface, one fact remains clear. According to Joe Flower, author of Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney, the Disney name “remains the company’s largest resource, an asset that would be difficult if not impossible for any other company to build or buy. While Disney may suffer setbacks in particular areas, and may even abandon some businesses, it is likely that, all things considered, the company will continue to grow faster and more safely through the next decade than the average American company.”
Buena Vista Home Video; Buena Vista International; Buena Vista Pictures Distribution, Inc.; Buena Vista Television; Childcraft Educational Corp.; The Disney Channel; Disney Consumer Products International, Inc.; Disney Development Co.; The Disney Store, Inc.; EDL Holding Co.; Euro Disney S.C.A. (49%); KHJ-TV, Inc.; Lake Buena Vista Communities; Reedy Creek Energy Services, Inc.; Walt Disney Imagineering; Walt Disney Pictures and Television; WCO Parent Corp.; WED Transportation Systems, Inc.
Thomas, Bob, Walt Disney, an American Original, New York, Simon & Schuster, 1976; Leebron, Elizabeth, Walt Disney: A Guide to References and Resources, Boston, G. K. Hall, 1979; Beard, Richard R., Walt Disney’s Epcot, New York, Abrams, 1982; Maltin, Leonard, The Disney Films, New York, Crown, 1984; Birnbaum, Steve, The Best of Disneyland, Boston, Houghton Mifflin, 1987; Taylor, John, Storming the Magic Kingdom: Wall Street, the Raiders, and the Battle for Disney, New York, Knopf, 1987; Holliss, Richard, The Disney Studio Story, New York, Crown, 1988; Flower, Joe, Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney, New York, John Wiley & Sons, 1991; Grover, Ron, The Disney Touch: How a Daring Management Team Revived an Entertainment Empire, Homewood, 111., Business One Irwin, 1991; Weinraub, Bernard, “2 Titans Clash and All of Filmdom Feels Shock Waves,” New York Times, April 13, 1992; “Disney Profit Jumps 30%,” New York Times, April 28, 1992; “Disney Trimming Theme Park Staff as Par Gears Up,” Variety, August 3, 1992; Toy, Stewart, Patrick Oster, and Ronald Grover, “The Mouse Isn’t Roaring,” Business Week, August 24, 1992.
updated by Jay Pederson
Walt Disney Company
Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
The Walt Disney Company is one of the most creative and successful forces in the entertainment industry. The company is best known for bringing decades of fantasy to families through its motion pictures, television series, and amusement parks. In the early 1980s Disney expanded beyond the family-film market with the creation of Touchstone Films, which was responsible for the release of some of the most popular motion pictures of the 1980s.
The company’s founder, of course, was Walt Disney. Born in Chicago in 1901, Disney’s father, Elias Disney, moved his family throughout the Midwest seeking employment. Disney grew up in a household where hard work was prized; feeding the five Disney children left little pocket change for amusement. Walt Disney began working at age nine as a newspaper delivery boy. Elias Disney instructed his children in the teachings of the Congregational Church and socialism. Later, Walt Disney’s appeal to greater America was said to have roots in his middle-class, Midwestern upbringing.
Drawing provided an escape for Disney, and at age 14 he took his work on the road and enrolled at the Kansas City Art Institute. Disney’s art was temporarily put on hold when he joined the Red Cross at age 16 to serve as an ambulance driver at the end of World War I. In 1919 Disney returned to the United States and found work as a commercial artist. Together with Ub Iwerks, another artist at the studio, Disney soon formed an animated cartoon company.
In 1923, following the bankruptcy of this Kansas City company, Disney joined his brother Roy in Hollywood. By the time he arrived on the West Coast, word came from New York that a company wanted to purchase the rights to a series of Disney’s live-action cartoon reels—the one which would later be called Alice Comedies. A distributor named M. J. Winkler offered $1,500 per reel and Disney joined her as a production partner.
A series of animated films followed on Alice’s heels. In 1927 Disney started a series called “Oswald the Lucky Rabbit” which met public acclaim. Winkler, however, had the character copyrighted in her own name, so Disney earned only a few hundred dollars. It was while pondering the unfairness of this situation on a California-bound train that Disney first thought of creating a mouse character named Mortimer. He shortened the name to Mickey, drew up some simple sketches, and went on to make several Mickey Mouse films with his brother Roy, using their own money.
On the third Mickey Mouse film, Disney decided to take a bold step and add sound to what later became Steamboat Willie. The cartoon was synchronized with a simple musical background. The process provided some of the first technical steps in film continuity: music was played at two beats a second and the film was marked every 12 frames as a guide to the animator, and later an orchestra.
Film distributors laughed at Disney’s ideas. Finally one, Pat Powers, released Steamboat Willie, which was met by highly favorable reviews. Audiences loved what they saw and heard, and suddenly he was a hit in the animation business. In 1935, The New York Times called Mickey Mouse “the best known and most popular international figure of his day.” Meanwhile Disney personally suffered from largely unfair press treatment pointing out that he was not a great cartoonist and that Ub Iwerks was responsible for the design of Mickey Mouse and the other characters. He was, however, given credit for his ability to conceptualize characters and stories.
The Mickey Mouse projects brought in enough cash to allow Walt Disney to develop other projects, including several full-length motion pictures and advances in Technicolor film. Disney’s first full-length motion picture was called Snow White and the Seven Dwarfs. The movie opened in 1937 to impressive crowds and led to a string of Disney hits, including Pinocchio and Fantasia in 1940, Dumbo in 1941, Bambi in 1942, and Saludos Amigos in 1943.
In mid-1940 Disney decided to tackle live-action films, first in The Reluctant Dragon and to a greater extent in 1946’s Song of the South. Meanwhile, during World War II, Disney lent his characters to the war effort, making shorts, including one in which Minnie Mouse showed American housewives the importance of saving fats. After the war, Walt Disney Productions was back in business with live-action features including 20,000 Leagues Under the Sea. The Living Desert was released in the early 1950s by Disney’s new distribution company, Buena Vista, to tremendous box office success.
During the 1950s, as America became content to stay home and be entertained in front of the TV, Disney’s studio took full advantage of the television revolution. In 1954, the “Disneyland” television series premiered. The show included an introduction by Walt Disney, and incorporated film clips from Disney productions, live action, and coverage of Disneyland. Some four million people tuned in each week. Disney also made a national hero out of Davy Crockett when he made the folk hero the subject of a three-part program. Within a matter of weeks, American boys could not live without coonskin caps and other Crockett merchandise, all of which earned Disney a fortune. Crockett’s popularity led to the era of the Disney live-action adventures that included the late 1950s hits The Great Locomotive Chase, Westward Ho, Old Yeller, and The Light in the Forest.
In October, 1955 “The Mickey Mouse Club” debuted on the ABC television network. The daily hour-long show aired at 5 p.m. and made television history. In 1961 Walt Disney switched from ABC to NBC, where his hour-long show, as one of the first color shows, was renamed “Walt Disney’s Wonderful World of Color” (later changed to “The Wonderful World of Disney”). Aired at 7:30 p.m. on Sunday nights, the show ran for 20 years. At the same time, Disney was making movie stars out of Fred MacMurray, Hayley Mills, and Dean Jones in movies like The Shaggy Dog, The Absent-Minded Professor, Polly-anna, and The Parent Trap. In 1964, Disney’s Mary Poppins was one of the top-grossing films of the year.
At the same time, Disney had his hand in diverse projects, including Audio-Animatronics (automatically controlled robots) and a Florida amusement complex which eventually became Walt Disney World, to complement California’s Disneyland, which had become a vacation hot spot.
Disney required professionalism of his staff and demanded the highest-quality Technicolor available. His return was live-action films that topped competitors’ in both creativity and technical standards.
On December 15, 1966 Walt Disney died of lung cancer. Shortly after Disney’s death, his brother Roy issued an optimistic statement to the effect that Walt Disney’s philosophy and genius would be carried on by his employees.
But no one could match Walt Disney’s keen story sense or enthusiasm, and the studio floundered through most of the 1970s despite several strong CEOs, including E. Cardon “Card” Walker, who had joined the company as a traffic boy in 1938. Not that there weren’t any successes. Blackbeard’s Ghost, with Dean Jones and Suzanne Pleshette, was released in 1968. In 1969 Disney released The Love Bug, which became the year’s biggest box office hit and the second-highest grossing film in Disney history, after Mary Poppins. Three sequels and a short-run television series followed. Other popular releases of the late 1960s and the 1970s included The Jungle Book, The Aristocats, Bedknobs and Broomsticks, and several live-action features.
But a run of box office disappointments followed, including mid-1970s James Garner releases like One Little Indian and Castaway Cowboy. Robin Hood, distributed at the end of 1973, was a minor flop; The Small One was released around Christmas, 1976 and was labeled “too saccharine.” Finally, The Rescuers proved successful. A mildly-successful effort called Pete’s Dragon followed, combining human and animated characters.
Progress was slow for the Disney studio in the late 1970s and early 1980s. The studio released three new live-action movies: The World’s Greatest Athlete, Gus, and The Shaggy D.A. Mediocre films like Return from Witch Mountain and The Black Hole, a $20 million film that was lost in the amazing success of Star Wars, followed.
New CEO Ron Miller brought in new directors and younger writers who produced unremarkable films including Watcher in the Woods, Fox and the Hound, and even Tron, a computer-generated film that was one of Disney’s most daring efforts in years.
In 1983, beginning with the release of Mickey’s Christmas Carol, Disney’s fortunes finally began to look up. A string of successful movies followed, including Never Cry Wolf and the semi-successful horror movie Something Wicked This Way Comes, a Ray Bradbury tale. In 1983 the company also began marketing a pay-TV channel, the Disney Channel, which offers family-oriented programming and quickly became the fastest-growing pay-TV channel.
In 1984 corporate raider Saul Steinberg attempted a hostile takeover of the company. Disney ultimately bought Steinberg’s 11.1% holding in the company for $325.4 million. A number of greenmail suits were filed by shareholders against both Disney and Steinberg’s Reliance Group Holdings, charging that Disney’s managers had attempted to secure their positions and had lowered the value of the stock. The suits were settled in 1989 when the two companies jointly agreed to pay shareholders $45 million.
Shortly after their purchase of 18.7% of Disney’s stock, the Bass family of Texas hired Michael Eisner from Paramount Pictures to be Disney’s new CEO and Frank Wells to be president. And in 1985 Disney lured Gary Wilson from the Marriott Corporation and made him chief financial officer. Eisner’s creative instinct and Wilson’s negotiating savvy were crucial to making Disney the success it is today.
Eisner immediately began to emphasize Touchstone Films, a subsidiary whose purpose is to attract adult movie audiences. Splash, starring Daryl Hannah, Tom Hanks, and John Candy and directed by Ron Howard had had the biggest opening weekend business in the company’s history just six months before Eisner took over.
Eisner, like Walt Disney, has had the ability to predict and deliver the movies people want to see. Films like the 1985 release Down and Out in Beverly Hills helped Touchstone build momentum. Touchstone followed up with Outrageous Fortune, Tin Men, Ruthless People, and many other hits. In Eisner’s first four years as CEO, Disney surged from last place to first among the eight major studios.
Eisner also set out to take fuller advantage of expanding markets such as cable television and home video. Disney signed a long-term deal with Showtime Networks, Inc., giving the cable service exclusive rights to Touchstone and other Disney releases through 1996. In addition, Eisner bought KHJ, an independent Los Angeles TV station; sought new markets for old Disney productions through television syndication; and began to distribute TV shows like “Golden Girls” and “Win, Lose or Draw.”
Certain Disney classics, like Lady and the Tramp and Cinderella, were released on video cassette during the late 1980s. Eisner protected the value of the films by limiting the availability of the tapes. He also scheduled the re-release of many other films for the late 1980s and early 1990s, by which time a new generation of children would be ready to see the films in the theater once again. Disney’s revenues soon began to increase, averaging around a 20% annual improvement during the second half of the 1980s.
Disney also airs a two-hour show each Saturday on French television. Marketing and promotion of Disney videos and tie-in merchandise in other parts of western Europe are increasing. The theme parks continue to flourish. In 1989 Disney/MGM Studios theme park opened near Orlando, Florida, on the grounds of Walt Disney World. Despite its name, the park is not a collaboration between the two studios; Disney purchased the rights to include attractions based on MGM films. Euro-Disneyland, of which Disney owns 49%, will open outside of Paris in 1992; and Tokyo Disneyland, although it is not owned by the Walt Disney Company and profits the company very little, draws phenomenal crowds. In the United States, visitors to each of the original theme parks exceed ten million a year and are expected to continue to increase. Technical developments at the parks remain a major concern to the company. Between 1987 and the summer of 1989 Disney spent more than $1 billion constructing new park attractions.
In the early 1980s the parks were responsible for about 70% of the company’s revenue. Carrying a very low debt, and with $315 million in ready cash, Disney hopes to be equally fruitful abroad. Future plans include introducing more Disney books, videos, and tie-in merchandise to the Japanese market. In China, a half-hour Mickey and Donald show is a smash success, with 40 million viewers. Eisner is also exploring the possibility of Disney projects in Korea, Taiwan, Singapore, and South America.
Meanwhile, Touchstone remains healthy. Hollywood Pictures, Disney’s newest film-producing arm, began making more films in the late 1980s. Disney’s Silver Screen Partners, which arranges financing for films through limited partnerships, seems to have the golden touch. The studio continued to score hits with Three Men and a Baby, Good Morning Vietnam, Who Framed Roger Rabbit, and others. In addition, production costs run around $12 million per movie while the industry average is $16.5 million.
The ability of a motion picture studio to churn out hits consistently is rare. Disney’s film subsidiaries did exceptionally well in the 1980s; whether they can continue their success remains to be seen. The theme parks, however, are a very stable high-margin business, and growth for all of Disney’s businesses overseas looks quite promising as well. At home, the 200 companies licenced to make Disney products generated $1 billion in 1988. Michael Eisner seems to have found the formula for success in the entertainment business, nearly tripling turnover in his first four years, and Disney is reaping the rewards.
Buena Vista Pictures Distribution Inc.; Buena Vista International, Inc.; Disneyland International; Lake Buena Vista Communities, Inc.; Reedy Creek Services Inc.; Walt Disney Travel Co., Inc.; Walt Disney World Co.; The Disney Channel; Disney Development Co.; Buena Vista Home Video; Buena Vista Television; Childcraft Education Corp.; Childcraft Inc.; Disney Educational Productions; The Disney Store, Inc.; Euro Disneyland Corporation; KHJ-TV, Inc.; The Walt Disney Catalog, Inc.; Walt Disney Imagineering; Walt Disney Pictures and Television; WCO Hotels, Inc.; WCO Port Properties, Ltd.
Thomas, Bob. Walt Disney, an American Original, New York, Simon & Schuster, 1976; Leebron, Elizabeth. Walt Disney: A Guide to References and Resources, Boston, G.K. Hall, 1979; Abrams, Harry. Walt Disney’s Epcot, New York, Abrams, 1982; Maltin, Leonard. The Disney Films New York, Crown, 1984; Birnbaum, Steve. The Best of Disneyland, Boston, Houghton Mifflin, 1987; Taylor, John. Storming the Magic Kingdom: Wall Street, the Raiders, and the Battle for Disney, New York, Knopf, 1987; Holliss, Richard. The Disney Studio Story, New York, Crown, 1988.
Walt Disney Company
Walt Disney CompanyEARLY HISTORY
AFTER WALT: THE SIXTIES THROUGH
THE DISNEY DECADE
DISNEY IN THE TWENTY-FIRST CENTURY
Though the Walt Disney Company began as an independent production company producing cartoons distributed by other companies, in 2005 the company was one of the Hollywood majors and the second largest entertainment conglomerate in the world.
The history of the Walt Disney Company is bound up with the history of Walt Disney himself. Disney began cartooning in Kansas City with a series called Alice's Wonderland (1923), which included live action and animation. When he moved to California in 1923, he made arrangements with a New York company to distribute the Alice films. (The company considers this as its starting date.) Since Walt Disney (1901–1966) was a partner with his brother Roy (b. 1930), the company was originally called the Disney Brothers Cartoon Studio. However, the name was shortly changed to the Walt Disney Studio, which had moved to a location on Hyperion Avenue in Hollywood.
Beginning in 1927, the company developed an all-animated series called Oswald the Lucky Rabbit. After losing the rights to the character, Walt and his chief animator, Ub Iwerks (1901–1971), developed Mickey Mouse, the character that has come to symbolize the company itself. Mickey was featured in cartoons that utilized synchronized sound, the first of which was Steamboat Willie, which opened in New York on 18 November 1928. A long series of cartoons based on the popular character became the staple product of the company.
The company also began producing another series to feature sound and animation innovations. The Silly Symphonies series included "Flowers and Trees" (1932), the first full-color cartoon, which won the first Academy Award® for Best Cartoon that same year. The Disney studio continued to win the award during the entire 1930s and most years thereafter. Disney also developed merchandising connected to its cartoon characters, beginning with a $300 license to put Mickey Mouse on writing tablets in 1929. Other products quickly followed, including dolls, toys, dishes, and so on, attracting funds that the company used to produce its innovative and popular cartoons.
The company expanded into feature-length animation with Snow White and the Seven Dwarfs (1937). Although there were doubts about the viability of feature length animated films, the project was an enormous success, becoming the highest grossing film of all time, until it was surpassed by Gone With the Wind (1939). The company continued to produce animated cartoons and features, including Pinocchio and Fantasia, both released in 1940. Many technical achievements were developed by the studio in the process, but the cost of the films strained the small company's resources, especially during World War II, when foreign markets were closed.
During World War II, Disney produced two films in South America for the US Department of State (Saludos Amigos  and The Three Caballeros ), as well as propaganda and training films for the military. After the war, the company repackaged some of its cartoons into features (Make Mine Music  and Melody Time ), as well as developing such live-action films as Song of the South (1946) and So Dear to My Heart (1949), both of which included animated segments. Disney'sTrue-Life Adventure series introduced a new style of nature film, which attracted numerous awards and accolades.
Disney's first completely live-action film, Treasure Island, was released in 1950, as was the classic animated feature Cinderella and the first Disney television show at Christmas time. After two Christmas specials, Disney moved further into television with the beginning of the Disneyland anthology series in 1954. Over the years this series eventually appeared on all three networks under six different titles. When The Mickey Mouse Club, one of the most popular children's series on television, debuted in 1955, it introduced a group of young performers called Mouseketeers. These television shows promoted Disney products and developed an outlet for new products.
Another opportunity to promote Disney products was provided by the creation of Disneyland, a theme park that opened on 17 July 1955, in Anaheim, California. Featuring characters and stories from Disney films, the park was immediately successful and has continuously added new attractions based on new Disney films.
The Disney Company also finally started its own distribution company (Buena Vista Distribution) during the 1950s, having depended until then on other distribution firms to deliver its cartoons and features to theaters. Also during the 1950s, the company released 20,000 Leagues Under the Sea; the first in a series of wacky comedies, The Shaggy Dog (1954); and a TV series about the legendary fictional hero, Zorro. The company also developed Audio-Animatronics, which were introduced at Disneyland beginning with the Enchanted Tiki Room. Walt Disney died on 15 December 1966, shortly after the release of Mary Poppins (1964).
By the 1960s, the company had developed a diversified foundation, with the Disney brand firmly established in a wide range of film products (live action and animation), as well as television, theme parks, and merchandise. The Disney firm also benefited from a policy of re-releasing its popular (already amortized) feature films every few years, reaping additional profits with minimal additional expenditures. For instance, Snow White and the Seven Dwarfs was re-released in 1952, 1958, and 1967, amassing an additional $50 million.
With some success, Roy Disney, Donn Tatum (previously, vice president of administration), and Cardon E. Walker (formerly in marketing) served as the management team until 1971. Film releases included The Jungle Book (1967), Winnie the Pooh and the Blustery Day (1968)—the beginnings of a franchise that would become especially lucrative during the 1990s—and The Love Bug (1968). Roy Disney saw Walt Disney World in Orlando, Florida, open in October 1971, but he died a few months later.
After Roy's death, Tatum moved into the chairman position and Walker became president. By this time, however, the company had become even more oriented to recreation and real estate than entertainment, exemplified by the theme park expansion (Tokyo Disneyland opened on 15 April 1983) and an ambitious plan to develop a mountain resort in Mineral King, California (which eventually failed).
Meanwhile, the film division was turning out mainly box-office duds, which fell far short of previous Disney successes. Part of the reason may have been the attempt to cling to the past, attempting to reproduce the classic Disney films and avoiding the changes that were being adopted by the rest of the industry. For instance, the management turned down proposals for Raiders of the Lost Ark and ET, The Extra-Terrestrial—both films that became huge box office hits. By the early 1980s, Disney's share of the box office was less than 4 percent.
Moreover, the company seemed to be moving into new media outlets at a leisurely pace. By the early 1980s, much of the film industry had started to adjust to the introduction of cable and home video as new opportunities for distribution of theatrical motion pictures, plus opportunities for new investments. The Disney company made a few moves in this direction, with the launching of the Disney Channel in April 1983, and an adult-oriented film label, Touchstone, inaugurated in 1984 with the release of Splash. However, by the mid-1980s, most analysts agreed that the company's management was basically "sitting on its assets," trying to "do what Walt would have done" and not doing a very good job of it.
Finally in 1984, Disney's uninspired management was challenged by a group of outside high-profile investors and eventually lost control of the company. A group of corporate raiders who recognized the value of the enterprise started accumulating huge blocks of Disney stock and jockeying for position to take over the company. In the end, the billionaire Bass brothers of Ft. Worth, Texas, invested nearly $500 million in Disney, preventing a hostile takeover and the possible dismantling of the company. Bass Brothers Enterprises ended up with nearly 25 percent of the Disney stock, enough to control the company and to appoint their own managers.
The new management team (which dubbed itself "Team Disney") was led by Michael Eisner (b. 1942), former head of Paramount, as chief executive officer. Team Disney also included former Warner Brothers's vice chairman, Frank Wells, who served as Disney's president and chief operating officer until his death in 1994. Jeffrey Katzenberg (b. 1950) (also from Paramount) became head of the Film Division.
Immediately after the team was put into place, it proceeded to break a strike at Disneyland and fire 400 Disney employees. Other cost-cutting measures and strategies were introduced, as discussed below. But the real evidence of Team Disney's achievements for Disney's owners is in the value of the company's stock and its balance sheets. From 1983 to 1987, annual revenues more than doubled, profits nearly quintupled, and the value of Disney stock increased from $2 billion to $10 billion; by 1994, it was worth $28 billion. By 1999, company revenues totaled nearly $23 billion, assets were over $41 billion, and net income was $1.85 billion.
When the new ownership and management team took over in 1984, the Disney empire extended its reach more widely than ever. While drawing on valuable assets and previous policies, Team Disney also introduced new strategies that must be understood in the context of the entertainment business of the 1990s. As with the other major Hollywood companies, Disney's expansion did not depend solely on motion pictures, but on a wide array of business activities in which the new management team aggressively exploited the Disney brand name, as well as diversifying outside of the traditional Disney label. Team Disney rejuvenated the sagging corporation through a variety of new policies, including reviving the classic Disney (by repackaging existing products and creating new animated features), modernizing some Disney characters, implementing rabid cost cutting (especially on feature films), introducing dramatic price increases at the theme parks, and employing new technological developments (such as computer animation).
However, Team Disney also emphasized at least four other related strategies that the Disney Company had already developed: corporate partnerships, limited exposure in new investments, diversified expansion, and further development of its corporate synergy. Disney not only added a wide range of corporate activities, but the company linked these different business endeavors under the Disney brand (and, more recently, the ABC and ESPN brands). The management's stated goal was to identify the most profitable holdings and develop synergies across the corporation. So not only was Team Disney busy diversifying, it became masters at business cross-fertilization, perhaps the quintessential masters of synergy. During the early years of the Disney Decade, the company continued to expand and prosper utilizing these strategies. In 1991, the company ranked in the top 200 US corporations in terms of sales and assets and was 43rd in terms of profits. The company's stock was worth $16 billion.
Despite earning $1.1 billion in profits and more than $10 billion in revenues, as well as becoming the first film company to gross over $1 billion annually in domestic box office, a shadow fell over the Magic Kingdom in 1994. Wells died in a helicopter accident, Eisner had heart surgery, EuroDisney (which had opened in 1992) was suffering huge losses, and a proposal for a new historic theme park was getting hammered by nearly everyone. It looked like the company was running out of magic. Then in July 1995, the company stunned Wall Street and the media with the dramatic $19 billion take-over of Capital Cities/ABC. The move greatly enhanced the company's position in television, sports programming, and international marketing, in addition to adding publishing and multimedia components to its operations. Thus, Disney became—at least for a short while—the world's largest media company, with $16.5 billion in annual revenues.
The Walt Disney Company today is made up of several divisions: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. As the company boasts on its website, "Each segment consists of integrated, well-connected businesses that operate in concert to maximize exposure and growth worldwide."
The Disney Company creates a wide range of entertainment products, including animated and live-action films under the Walt Disney label (such as The Lion King and The Pirates of the Caribbean), as well as using the Touchstone, Hollywood, Miramax, and Dimension labels, which have released a wide variety of films such as Splash, Pulp Fiction, and Cold Mountain. Thus, the company distributes adult and foreign films that are not associated with the family-oriented, PG-rated Disney brand. The Studio Entertainment division contributed over $8.7 billion of the company's revenues for 2004.
Buena Vista Home Entertainment manages Disney's home video business and interactive products around the world. As with its film products, Disney has diversified its television offerings, producing and distributing a variety of programming under the ABC, Buena Vista, Touchstone, and Walt Disney labels. Disney also produces theatrical versions of successful animated films through Buena Vista Theatrical Productions and has become an undeniable presence in Manhattan, not only by way of its stage productions and the Disney Store in Times Square, but through extensive real estate holdings, including the headquarters of ABC.
Audio and musical products offer further opportunities to feature Disney properties and are especially lucrative for animated features. Buena Vista Music Group coordinates Disney's various recorded music businesses, which include Walt Disney Records, Buena Vista Records, Hollywood Records, and Lyric Street Records, which make a wide range of audio and music products.
Not only are Disney's merchandising activities legendary in terms of their historical precedence, the more recent strategies are remarkable. The Walt Disney Company is certainly the foremost merchandising company in Hollywood and produces or licenses a seemingly endless array of products. The Consumer Products division contributed over $2.5 billion of the company's revenues in 2004.
Disney Consumer Products, one of the largest licensors in the world, is divided into Disney Hardlines, Disney Softlines, and Disney Toys. Disney merchandise is marketed at retail outlets around the world, its own outlets at the theme parks, through on-line sites, by way of the Disney Catalogue, and at Disney Stores worldwide. The Disney Company also produces a wide range of printed material, ranging from comic books and children's magazines to adult-oriented magazines and books. At the end of 1998, the company maintained that its print products, which are published in 37 languages and distributed in more than 100 countries, make it rank above all other publishers in the world in the area of children's books and magazines. In addition to publishing under the Hyperion banner (including, ESPN Books, Talk/Miramax Book, ABC Daytime Press, and Hyperion East), it publishes the number one children's magazine in the United States, Disney Adventures. The Consumer Products division also includes Buena Vista Games, which turns Disney content into interactive gaming products, and the Baby Einstein Company, which produces developmental media for infants.
Parks and Resorts.
Walt Disney Parks and Resorts operates or licenses 10 theme parks on three continents along with 35 resort hotels, two luxury cruise ships and a wide variety of other entertainment offerings. The division contributed over $7.7 billion of the company's revenues in 2004.
The Disney empire includes six major theme parks: Disneyland (including hotels, shopping, dining and entertainment venues and a new addition, California Adventure); Walt Disney World Destination Resort (including four different theme parks, numerous hotels, recreational activities and shopping outlets); Tokyo Disneyland (with Tokyo Disney Sea, since 2001); Disneyland Paris and Hong Kong Disneyland, which opened in September 2005.
Disney Regional Entertainment currently operates eight ESPN Zones, featuring sports-themed dining and entertainment. The Disney Cruise Line features voyages from the Florida complex to the Bahamas, with onboard activities for adults and for families. The company also was the mastermind of Celebration, the neotraditional planned community south of Disney World. A number of sports properties supplement the company's strong sports media holdings (see below), including the Mighty Ducks (hockey), as well as extensive sports facilities in Florida.
Through the acquisition of Capital Cities/ABC in 1995, Disney firmly established its role as one of the dominant players in the US media industry. The ABC television network provides abundant opportunities to promote Disney-produced programming and other businesses, as well as exploiting the more popular ABC programs throughout the rest of the Disney empire. In 2004, the Media Networks division attracted over $11.7 billion, more than any of the other divisions.
The ABC Television Network includes ABC Entertainment, ABC Daytime, ABC News, ABC Sports, ABC Kids, and the Disney-owned production company, Touchstone Television. In addition, Disney owns 10 television stations (affiliated with ABC) that reach approximately 25 percent of the nation's households, as well as 72 radio stations, including Radio Disney, ESPN Radio, and ABC News Radio.
Disney's ownership of ESPN is through ABC, which owns 80 percent of ESPN Inc. in partnership with the Hearst Corporation. The franchise includes four domestic cable networks, regional syndication, 21 international networks, radio, Internet, retail, print and location-based dining, and entertainment. At the end of 1999, the flagship network reached over 77 million subscribers domestically, while ESPN International is said to reach more than 152 million households in 190 countries. The ESPN franchise diversified its activities even further, adding ESPN Magazine, ESPN Radio, ESPN Zones (restaurant entertainment centers), ESPN Skybox on Disney Cruise Line ships, and ESPN merchandise. Meanwhile, ESPN.com is maintained to be the most popular sports site on the Internet.
Disney's other cable holdings include the Disney Channel, ABC Family, 37.5 percent of the A&E Network, 37.5 percent of The History Channel, 50 percent of Lifetime Entertainment Services (including Lifetime and the Lifetime Movie Network), 39.6 percent of E! Entertainment Television, Toon Disney (with recycled Disney programming), and SoapNet (a 24-hour soap opera channel). The segment also operates Walt Disney Television Animation and Fox Kids International, as well as Buena Vista Television and Buena Vista Television International.
Meanwhile, The Walt Disney Internet Group manages the company's Internet business. The Company's Internet site, www.disney.com, is consistently rated as one of the Web's most popular sites, while The Daily Blast serves as a subscriber-based Website, which includes various features from Disney-owned enterprises. While the Walt Disney Company seems to have been plagued in the early years of the twenty-first century with a series of highly visible controversies pertaining to executive compensation, the composition of its Board of Directors, and Eisner's replacement, the conglomerate still holds valuable assets that continue to pay dividends. The company reported revenues of over $30 billion for 2004, with nearly $4.5 billion income and $1.12 earnings per share.
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Watts, Steven. The Magic Kingdom: Walt Disney and the American Way of Life. Boston: Houghton Mifflin, 1997.
Walt Disney Company
Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Starting with animated films featuring animals, including a particularly famous white-gloved mouse, the Walt Disney Company grew to become a leading provider of all forms of family entertainment. It also established one of the world's best-known and respected brand names. People from around the globe flock to Disney theme parks and Disney movies, and in most countries at any given time, someone is bound to be sporting a T-shirt or watch featuring Mickey Mouse, Goofy, Pluto, or any one of the dozens of well-known Disney characters. The man behind the vision was animator Walt Disney, who turned a small company into a part of American popular culture.
A Mouse Leads the Way
Walt Disney had already failed running one animation company when he reached Hollywood, California, in 1923. His brother Roy (1893-1971) was already living there, and together they formed the Disney Brothers Studio. Walt was the artist, creating characters and developing stories, while Roy handled the business affairs, especially raising money. The brothers signed a deal to make cartoons, receiving $1,500 per reel of film.
In 1926, Disney Brothers Studio became Walt Disney Studios (and later Walt Disney Productions), reflecting Walt's role as the creative force. In 1927, he created a cartoon character called Oswald the Lucky Rabbit, who starred in more than two dozen cartoons. The company's big break, however, came in 1928, with the first appearance of Mickey Mouse. Mickey appeared in two silent cartoons before starring in Steamboat Willie, the first cartoon with sound. (The first film with sound, The Jazz Singer, had been released the year before.) By this time, Disney was no longer drawing cartoons himself. He relied on other artists, particularly longtime friend Ub Iwerks (1901-1971). But Disney remained directly involved in creating the stories for his cartoons, and insisted on the highest quality possible.
Steamboat Willie was a sensation, and quickly led to more Mickey Mouse cartoons and other talking animal characters. In 1929, a stationery company saw the value of putting Mickey's face on pads of paper. Disney sold the company the right to use the mouse's image for $300. Within a few years, Disney hired an advertising company to put Disney characters on other products, and soon Disney Productions earned about 10 percent of its income from these licensing deals.
Walt Disney at a Glance
- Employees: 114,000
- CEO: Michael Eisner
- Subsidiaries: ABC Holding Company, Inc.; ABC, Inc.; American Broadcasting Companies, Inc.; Buena Vista Home Entertainment, Inc.; Disney Enterprises, Inc.; ESPN, Inc.; Walt Disney World Company
- Major Competitors: DreamWorks SKG; Vivendi Universal; Viacom; AOL Time Warner; Comcast; News Corporation; Bertelsmann AC
- Notable Products and Companies: Theme parks: Disneyland, Disney's California Adventure, Disney World, Disneyland Resort Paris, Tokyo DisneySea, EPCOT; TV networks: ABC, ABC Family Channel, ESPN, The Disney Net work; Film production companies: Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax; Record companies: Hollywood Records, Buena Vista Records; Hyperion publishing; Disney Online; Disney Cruise Line
While expanding into other businesses, Disney did not ignore its primary purpose: to make movies. By 1931, the studio staff totaled seventy-five employees. The next year, the company released the first full-color cartoon, Flowers and Trees. The cartoon won an Academy Award, filmmaking's highest honor. In 1937, Disney made the world's first full-length animated film, Snow White. Other filmmakers thought Disney could not come up with a good enough story to entertain people with a long cartoon, and they nicknamed the film "Disney's Folly." Snow White, however, was a huge hit, and was followed by Pinocchio and Fantasia, both released in 1940.
- With his brother Roy, Walt Disney forms Disney Brothers Studio, which later becomes the Walt Disney Company.
- Steamboat Willie, featuring Mickey Mouse, is the world's first cartoon with sound.
- Disney releases Snow White, the first full-length animated movie.
- Disneyland opens in Anaheim, California.
- Walt Disney dies.
- Disney World opens in Orlando, Florida.
- Michael Eisner becomes CEO of Disney.
- Beauty and the Beast is Disney's first Broadway musical.
- Disney buys the ABC television network, which also gives it control of ESPN and other cable networks.
- Disney launches its own cruise line.
The success of Snow White allowed Disney to build a new $3 million studio in Burbank, California. The studio featured plush working conditions for the time, including air conditioning and a cafeteria that delivered to workers' desks. But by 1941, workers were demanding better pay as well. A strike at the studio upset Disney for several reasons: the company was already in debt, plus Disney felt that he had always tried to treat his workers well.
The strike ended just before the United States entered World War II (1939-45). During the war, the Disney company produced animated training films for the government, as well as entertainment. Some of the Disney cartoons served as propaganda, reminding Americans how to contribute to the war effort and making fun of the country's enemies. Disney's major theatrical release during the war was Bambi, which featured some of the studio's most realistic drawings of animals.
After the war, with Disney Productions still in debt, the company began to make its first live-action films. Some were "true life" stories, featuring animals or people in exotic locations. The first of these, Seal Island, was released in 1948. Two years later, Disney produced its first live-action story, Treasure Island, based on the classic book by Robert Louis Stevenson (1850-1894). Even as the company moved beyond cartoons, it stayed true to its roots of offering well-made family entertainment.
Disneyland, Television, and the Future
By the early 1950s, Walt Disney had a creative vision. He wanted to build an amusement park tied to different Disney products that recreated the look and feel of a small American town. The final product was Disneyland, built for $17 million dollars in Anaheim, California. The park opened in 1955, and within a year it earned $10 million—one third of Disney's total revenue.
The money needed to build Disneyland forced Disney Productions to take on a partner. ABC, a television network, invested in the park and loaned Disney money in return for one-third ownership (the company later sold its share back to Disney). The deal also led to a weekly Disney television program on ABC, called Disneyland. The show featured clips from Disney movies and new programs filmed for television. Walt Disney introduced each show, which made him an instant celebrity. For three years, the program was ABC's most popular program; it ran under different names until 1981. A new version appeared in the 1990s.
Soon Disney began producing other TV shows, such as Zorro and The Mickey Mouse Club, featuring the "Mouseketeers." These young actors sang, joked, and performed in sketches. They were known by the hats they wore, which looked like Mickey Mouse's ears. Disney Studios also made new films, including the musical comedy Mary Poppins (1964), which was nominated for thirteen Academy Awards. The success of such films helped Disney get out of debt in the early 1960s.
By this time, Walt Disney was moving out of film production to concentrate on building his own community. He called the town the Environmental Prototype Community of Tomorrow (EPCOT). Disney was actively involved in designing Epcot when he died in 1966.
Disney after the Disneys
The death of Walt Disney left Roy 0. Disney in charge. He died in 1971, just after the opening of Disney's second theme park, Disney World, in Orlando, Florida. E. Cardon Walker, a longtime employee, then took over as president of the company. Roy E. Disney (1930-), the son of Walt's brother, also had a key role as vice president of animation. Walker tried to run the company as he thought Walt would have, although he lacked Disney's creative genius. For several years, the films Walker chose to make did well, but after 1974, his family-oriented fantasies and comedies were flops, considered old-fashioned by many kids and teens.
By 1979, the company had the worst sales of all the major film producers. Disney was also struggling to build EPCOT and eventually spent more than $1 billion to complete it. As business suffered, the company spent less money maintaining its two theme parks, and revenues there also fell.
One of the first Disneyland television shows was about the historic frontiersman Davy Crockett. It soon became a huge hit and sparked a national fad as boys and girls clamored for coonskin caps similar to the one Crockett wore on the show. Disney was only too happy to oblige.
In 1983, Walt Disney's son-in-law, Ron Miller, was elected the new chief executive officer (CEO). Miller had already begun to modernize Disney by forming a new studio, Touchstone Pictures, to make films that were not necessarily geared toward families. As CEO, Miller also launched Disney's own cable station, the Disney Channel. Investors, however, believed Walt Disney Productions was not as profitable as it should be. One of these people was Roy E. Disney, who had left the company in 1977. Along with his business partner Stanley Gold, Disney attempted to take over the company.
Disney and Gold were not alone. Other prominent investors, including Saul Steinberg, Irwin Jacobs, and the Bass family of Texas, bought shares in the company, hoping to make a profit. When the dust settled, Disney united with Bass to win control of the company in 1984. One of their first moves was replacing Ron Miller with Michael Eisner, a former executive at Paramount Pictures. Assisting him was Frank
Wells, who had played a part in organizing Roy Disney's takeover bid.
Rebirth of a Company
Eisner, like Walt Disney, had a strong creative streak, although he also had Roy 0. Disney's business sense. Eisner carried out Miller's plan of re-releasing old Disney films on videotape, then strengthened the animation division. He put Jeffrey Katzenberg (see DreamWorks SKG entry), another former Paramount executive, in charge of film production. Katzenberg was able to make money by spending much less than other studios on salaries and production. Eisner's other moves included boosting advertising for Disney's theme parks and producing the hit TV show, The Golden Girls. By the end of 1986, company revenues reached $2.4 billion.
Eisner, however, was just starting his ambitious program to expand the Disney company. That year, Disney changed its name to the Walt Disney Company. By 1989, the company had bought its own TV station, opened its own stores to sell Disney-related items, and spent more than $1 billion to modernize Disney World. Disney also started a third film company, Hollywood Pictures, which also had its own record label. The next year, Disney opened a new studio, built with MGM, near Disney World. Other projects there included a water park and new resort complexes.
The new projects continued during the 1990s. The company bought a hockey franchise and named it after a team featured in one its movies, the Mighty Ducks. Later, Disney bought a baseball team, the California Angels. In film production, a new wave of quality animated films led to strong boxoffice revenues and new licensing fees. The company also took control of Miramax, a film company known for its intelligent, smaller-budget films. Disney had a new hit TV show with Home Improvement, and it launched its own publishing company, Hyperion. By 1993, revenues reached $8.5 billion, with a larger percentage coming from international operations than in the past.
The next year, Disney released The Lion King, the top movie of the year. The soundtrack recording of The Lion King reached number one, and a Broadway play based on the movie was also a hit. Disney first came to Broadway in 1994, producing a musical based on its film version of Beauty and the Beast. The same year, the company bought a Broadway theater, helping to revitalize New York's Time Square area.
With its growth and power, Disney under Eisner developed a reputation for being tough. The company's movies continued to cost less to make than other film studios, and it drove hard bargains with partners and distributors. In 1995, Eisner told Fortune, "If you're soft and fuzzy, like our characters, you become the skinny kid on the beach, and people in this business don't mind kicking sand in your face." At the same time, however, Eisner was earning huge salaries, most of it tied to Disney stock. To some people, he became a symbol of the growing gap in pay between America's chief executive officers and its average workers.
Disney around the World
In 1983, Disney's first overseas theme park opened, in Tokyo, Japan. Although it did not own the park, Disney made money managing it. Its second major foreign development was Euro Disney, built outside Paris, France, and later renamed Disneyland Resort Paris. The park opened in 1992 and lost money at first, but eventually generated a profit for the company. Disney opened a second theme park in Tokyo in 2001, and made plans to open a park in Hong Kong. In March 2002, the company launched a second theme park near Paris called Walt Disney Studios Park.
New Worlds to Conquer
Disney moved farther into television with its 1995 purchase of Capital Cities/ABC for $19.6 billion. The network owned several cable channels, including the hugely successful sports network, ESPN. The company also built a sports complex in Florida and opened a planned community, Celebration. The town, built from scratch, was located just outside Walt Disney World. Already part of the travel industry with its theme parks and hotels, Disney started its own cruise line in 1998. That year, Disney also took a large step into the Internet, buying a large portion of search engine company Infoseek, so it could begin displaying its content on the World Wide Web—and create more demand for its products. In 2001, a second park opened in California—Disney's California Adventure.
Creating a multimedia empire, however, led to problems. By 1999, Eisner was looking for a way to cut costs to ensure future profits. The year before, sales had grown to $23 billion and profits were more than $1 billion. Still, business analysts complained about the company's direction. In 2001, Disney suffered when the September 11 terrorist attacks cut revenues at its theme parks. And while a few of its animated films were successful, none matched the popularity of The Lion King or Beauty and the Beast. Top executives, however, remained confident. Robert Iger, company president, told Fortune in January 2002, "We have an unbelievable array of brands to drive growth and operating income." Around the world, the name Disney still meant fun, wonder, and a sense of magic.
Walt Disney Co
WALT DISNEY CO.
The Walt Disney Co.'s most successful Internet role was as a content provider. Since the mid-1990s the company has operated Web sites for kids and parents, including Family.com and the subscription-based Blast online. It developed other Web properties, including ESPN.com, ABC.com, ABCNews.com, and other Disney sites. In 1998 the company embarked on a strategy to create an Internet portal to compete with America Online and Yahoo!, among others. It acquired an interest in search engine Info-Seek in 1998 with an eye to transforming it into an Internet portal. In 1999 Disney purchased the rest of InfoSeek and launched the Go.com portal. Go.com was renamed the Walt Disney Internet Group (WDIG) in 2000, a separate company that encompassed all of Disney's Internet ventures. With AOL gaining added muscle through its merger with Time Warner, it became clear that Go.com would not be able to compete with the leading Internet portals. After sustaining more than $1 billion in losses from Go.com and other Internet properties, Disney announced plans to close Go.com in 2001 and fold the WDIG back into the company. The company said it would focus on information and entertainment content rather than portals and electronic commerce.
DISNEY PUT ITS CONTENT ONLINE
The Walt Disney Co. launched its free, family-oriented Web site Family.com in 1996. The site had partnerships with more than 100 local parenting publications. It also offered a recipe library and a customized activities index for parents and their children. Parenting sites like Family.com attracted a large percentage of women, and thus advertisers were attracted to the site's demographics.
In 1997 Disney launched its Daily Blast site for kids. This subscription-based site charged $4.95 per month and was aimed at children age 12 and under. Its content included animated storybooks, downloadable games, and educational toys and puzzles. It also featured news and sports stories written by children. Disney's popular characters—including Mickey Mouse, Donald Duck, and Goofy—were also present at the site. Through an agreement with Microsoft Corp., users of the Microsoft Network (MSN) had free access to the Daily Blast site.
Other Internet sites operated by Disney at the time included Disney.com, where the company sold its merchandise, and sites affiliated with subsidiaries ABC-TV and ESPN. Disney also owned a majority interest in Starwave, based in Bellevue, Washington, which ran the family-oriented Family Planet site as well as ESPN SportsZone.
Disney.com was a popular site and consistently ranked high in popularity. As more people began to shop online in 1997, Disney.com reported a fivefold increase in online sales over 1996. The shopping site at Disney.com generated about as much revenue as three brick-and-mortar Disney stores, according to the company. In 1998 Disney and bookseller Barnesand-Noble.com teamed up to create Disney book boutiques that featured Disney titles and was available online at both companies' Web sites.
PORTAL STRATEGY FOR E-COMMERCE, 1998-2001
In 1998 Disney acquired a 43 percent interest in Internet search engine InfoSeek, with an option to purchase the rest of the company. At the time media companies in general were looking for ways to achieve a dominant presence on the Internet. NBC had just paid $38 million for a 19 percent interest in Snap!, an Internet portal owned by CNET. Later in the year America Online acquired Netscape Communications and its popular NetCenter portal. As part of its $472 million acquisition of InfoSeek, Disney paid $70 million in cash and turned over ownership of Starwave to InfoSeek. Disney would regain ownership of Starwave when it completed its purchase of all of InfoSeek in 1999. Disney also committed $165 million to provide promotional support for InfoSeek.
Disney's acquisition of InfoSeek was part of its strategy to distribute its content over all available media. Toward the end of 1998 Disney, InfoSeek, and Starwave introduced a new Internet portal, Go.com, in a beta version for consumers, followed by the official launch of the Go Network in January 1999. The home page of the Go Network resembled that of Info-Seek, but it was easily customizable. Content was organized into five major sections, which were accessible through page tabs: a sports area featuring ESPN.com; a news section featuring ABCNews.com; an entertainment area that included ABC.com and MrShowbiz.com; a family and kids area featuring Disney.com; and a personal finance section.
The launch of the Go Network in 1999 was supported by a national television advertising campaign that ran in 14 major markets. At the time of its launch, the Go Network had 20 million unique users, with 8 million of them registered. Following its launch the Go Network added Go Shop, an e-commerce site that featured more than 200 merchants, and Go Games, which offered a variety of individual and multiplayer games. In March 1999 Disney redesigned its Disney.com site, creating 12 content channels and merging its subscription-based Blast Online for kids into Disney.com. With about 80 percent of the new Disney.com content available for free, subscribers could join Club Blast for $5.95 per month or $39.95 per year and gain access to premium content, including the Disney BlastPad, a proprietary kid-safe instant messaging service that parents could control, and the Mouse House Jr., an area designed for children too young to read.
In mid-1999 Disney decided to acquire the remaining 57 percent of InfoSeek for $1.62 billion in stock. It created a new tracking stock company, Go.com, that incorporated InfoSeek, the Go Network, and Disney's Buena Vista Internet Group. When the purchase closed in November 1999, the transaction was valued at $2.15 billion.
DISNEY REVISES ITS INTERNET AND PORTAL STRATEGY, 2000-2001
By early 2000 it was clear that Go.com would not be able to compete with dominant portals such as America Online and Yahoo!. The company reported a loss of more than $1 billion in 1999 from its Internet properties. Adding to Disney's Internet losses was its venture into electronic commerce through a $45 million investment in Toysmart.com in 1999. As was the case with the Go Network, Toysmart.com ran into serious competition when Amazon.com formed an alliance with brick-and-click retailer Toys "R" Us. Toysmart.com officially went out of business in May 2000.
During 2000 Disney attempted to redesign the Go Network portal to concentrate it more on Disney's traditional family-and-fun content, building a self-contained search engine for all of Disney's Internet properties. In August Go.com was renamed the Walt Disney Internet Group (WDIG). Later in the year Compaq Computer Corp. became the WDIG's preferred technology provider through a $100 million agreement. The redesigned Go.com Web site was re-launched in September 2000. The new design featured Disney's individual Web sites more prominently. While it kept the InfoSeek search engine, the new Go.com site was designed as a place to find entertainment news and vacation information.
In January 2001 the WDIG and Walt Disney Parks and Resorts formed an online operation called Walt Disney Parks and Resorts Online that expanded Disney's presence on the Internet. In the face of a general economic slowdown and a slowdown in the Internet economy, Disney made deep cuts in its Internet operations in early 2001. The company announced plans to close down the Go Network and the Go.com Web site. In the interim Disney said it would operate a streamlined version of Go.com while it moved services and registered users to other sites. As part of the cutback Disney eliminated 400 jobs and folded the WDIG back into the company. All outstanding shares of WDIG common stock were converted into Disney common stock effective March 20, 2001. In had become clear that the tracking stock company was not providing enough revenue for additional investments or acquisitions or to retain employees. The management of WDIG would continue to be in charge of Disney's remaining Internet properties.
While Disney was not able to create an industry-leading portal, the company's other Internet properties remained leaders in their categories. Its experience with InfoSeek and Starwave enabled Disney to create a single, scalable platform for its Internet businesses. For the future, the company planned to continue to create and operate innovative, highly popular content sites. During 2001 the company was also involved in initiatives to bring online content to automobiles and wireless devices.
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SEE ALSO: Children and the Internet; Content Provider; Portals, Web